D2, the fashion retailer formerly owned by the Scottish billionaire Sir Tom Hunter, has become the first casualty of the post-Christmas trading period, putting more than 1,000 jobs at risk.
The clothing and footwear chain, which was offloaded by Sir Tom in January 2008 in a management buyout deal backed by HBOS, appointed the accountancy firm BDO as administrator yesterday.
D2 is the third current or former retailer of the Scottish entrepreneur to hit the buffers in the past 12 months. Sir Tom sold the shoe chain Qube in 2008 to JJB Sports for £1, but it collapsed earlier this year. His 40-store USC clothing chain continues to trade after emerging out of pre-pack administration in December 2008.
D2, which has 76 stores in the UK and three in Dublin, is the latest victim of tough trading conditions on the high street and the withdrawal of credit insurance for its suppliers.
In its latest accounts, for the year to the end of January 2008, the retailer made a pre-tax loss of £3m, on sales of £58m.
The D2 administration will fire a warning shot across the bows of the retail sector that it is not out of the woods at a time when many chains are enjoying a post-Christmas spike in sales.
Last week, Borders UK, the 45-store bookseller, closed its doors for the final time, and Threshers' owner, First Quench Retailing, which had 1,202 off-licence stores, including the Wine Rack fascia, collapsed in October.
Even when trading conditions have been more buoyant in previous years, January is often the time when banks lose patience and pull the plug on under-performing retailers.
BDO said it "regrettably" had to make 22 redundancies at D2 Trading's head office in Dundonald, Ayrshire, and closed two of its three stores in Dublin, Ireland, resulting in the loss of 39 jobs.
James Stephen, the joint administrator and business restructuring partner at BDO, said: "It is unfortunate that the economic climate and difficult trading conditions have significantly affected the retail sector." He added that it would continue to trade the remaining 77 stores and seek a buyer for all or part of the company as a going concern.
D2 sells clothing and footwear brands, including Lambretta, Jack & Jones, Firetrap, Rockport, Kickers, Benzini, Hoi Polloi and Nike, in stores and online. But last night its website was unavailable for orders.
Sir Tom – who famously vowed in 2007 to give £1bn to charitable causes during his lifetime – sold the chain for a nominal fee to the co-founders of D2, Alan Kinney and Jim McGonigle, in early 2008.
But his investment vehicle, West Coast Capital, has been hit hard by the credit crunch and the downturn in the retail and commercial property market.
Sir Tom was forced to write off his entire stake in the housebuilder Crest Nicholson and has also suffered writedowns on his shareholdings in the property developer McCarthy & Stone, as well as the garden centre retailer Wyevale.
Last night, a spokesman for Sir Tom said the retailer USC was on track to deliver a pre-tax profit in the year to the end of January 2010, after shedding 15 stores in a pre-pack administration in December 2008.